New Delhi, April 11: Trade deficit hit a five-month high of $10.5 billion in March and exports dipped for the second straight month, making it difficult for the government to lift the gold curbs that had helped to contain current account deficit.
In March, shipments contracted 3.15 per cent to $29.57 billion and imports fell 2.11 per cent to $40 billion from a year earlier. Trade deficit last month was at $10.5 billion compared with $10.4 billion in March 2013.
Merchandise exports in 2013-14 fell short of the target of $325 billion set by the government, but was higher than $300.4 billion in 2012-13.
Exports grew 3.98 per cent to $312.35 billion in 2013-14, while imports dipped 8.11 per cent to $450.94 billion, narrowing the trade deficit to $138.59 billion.
“Manufacturing is declining. About Rs 20,000 crore is held up with the revenue department as they are not clearing our refunds. The global demand situation is also not very healthy,” Rafeeq Ahmed, president of the Federation of Indian Export Organisations, said. He, however, expressed hope that exports would improve in the coming months.
A stronger rupee is also eroding exports growth. Crude imports continued to rise and accounted for $168 billion in 2013-14, against $164 billion in the previous year.
Arbind Prasad, director- general of Ficci, said: “It is worrisome that our exports fell in the last two months and we have missed the export target. Global growth is expected to improve...is likely to be led by developed economies, particularly the US. We hope growth in exports will pick up this year on the back of such recovery though weakness in China and strengthening of the rupee pose some risk.”
Overseas purchases of gold and silver dropped 40 per cent to $33.46 billion in 2013-14. The trade deficit in 2012-13 stood at $190.33 billion.
In March, import of the precious metals fell 17.27 per cent to $2.75 billion from $3.33 billion in the same month a year ago. However, it jumped from $1.63 billion in February, especially after the RBI allowed more private banks to ship the metal.